Business Ethics

Norms, Beliefs, Values

(A) ) Introduction:

In order to understand and comprehend the concept of Ethics & Business

Ethics, it is necessary to know the meanings & definitions of various terms
related to ethics. These are common terms , but it is considered necessary to
have clarity of these terms .

(B) Terms:-

(I) Norms:

Norms are rules of behaviour .

The rules may be explicit- clear & definite, expressed without any ambiguity

OR

implicit- not directly explained , virtual

Definition (1):

Norms are rules that a group uses for appropriate and inappropriate beliefs , values ,
attitudes and behaviours.

Definition (2)

Norms are the approved ways of doing things of dress , of speech , and of appearance .

NB:

Norms vary with time and place.

. I
(II) Beliefs:

Belief is a mental understanding and interpretation by an individual.

It may be rational or irrational- based on faith. The concept of belief presumes a

subject (the believer) and an object of belief (the proposal)

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Definition:

Belief is the psychological state in which an individual holds a proposition to be true.

(Ill) Values:

The values identify those objects , conditions or characteristics that an individual or a

member of a society considers important , that is valuable .

It is subjective- vary across people and cultures .

Norms are rules for behavior in specific situations, while values identify what should be
judged as good or bad or evil.

Definition:

Values are judgments about what is important in life.

.
(IV) Morality:

Morality (from the Latin moralitus) - means “manner , character , proper behavior".
Morality may be classified in two distinctive categories:-

1. Descriptive: Morality in descriptive usage, means a code of conduct or belief

which is held to be authoritative in matters of right or wrong.

Morality are arbitrarily created and subjectively defined by society, philosophy ,

Religion and/or individual conscience.

2. . Normative: Morality is an informal public system applying to all rational

persons , governing behavior that affects others , and has the lessening of evil
or harm as its goal.

Morality in normative or universal sense, refers to an ideal conduct of belief and

conduct which would be accepted by all rational persons all over the world .

It is prescriptive in nature.

Example : "Satyameva Jayate " - Truth alone prevails .

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 3. Ethical: In its third usage , morality is considered as synonymous with ethics
where ethics is considered as the systematic study of the moral domain .
Ethics seek to address questions-

(i) What morals people actually abide by (descriptive)?

(ii) How moral values should be determined (normative)?

(iii) How a moral outcome can be achieved (applied ethics - business

ethics)?

NB:

All these- Norms , Beliefs , Values , Morality change with Time & Place .

(V) Ethics :

The word ethics has origin in Greek word "Ethics" - which means "character, norms ,
Morals , and ideals prevailing in a group or society ." .

Ethics in general, is mass of moral principles or sets of values .

They give an idea what is right or wrong , true or false , fair or unfair , just or unjust ,
proper or improper.

Ethics addresses quest ions and concepts such as –

(a) Good vs . Bad,

(b) Noble vs . Ignoble ,
(c) Right vs Wrong ,
(d) Justice vs . Injustice ,
(e) Virtue vs .Vice .

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 (VI) Business Ethics:

Business ethics is form of applied ethics that examine s ethical principles and
moral or ethical problems that arise in a business environment.

It applies to all aspects of business conduct of individuals and business

organizations as a whole . Business ethics concern the ground rules of
individual company and societal behavior .

(a) Societal Level:-

(i) Concern for poor

(ii) No discrimination against particular section or group
(iii) Concern for clean environment
(iv) Preservation of scarce resources for posterity
(v) Contributing to better quality of life

(b) Stakeholder 's Level:-

(i) Security of job

(ii) Better working condition
(iii) Better recommendation
(iv) Participative management
(v) Welfare facilit ies

(c) Shareholder 's Level:-

(i) Ensure capita l appreciation

(ii) Ensure steady and regular dividend
(iii) Disclose all relevant information
(iv) Protect minority share-holder 's interest
(v) ) Not to window dress balance sheet

(d) Bankers & Financier 's Level:-

(i) Guarantee safety of borrowed money

(ii) Prompt & timely payment of loans

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 (e) Government Level:-

. (i) Complying with rules and regulations

(ii) Honesty in paying taxes and other levies

(f) Internal Policy Level:-

(i) Fair practices relating to recruitment , promotion etc

(ii) Transformational leadership to motivate employees to aim at better
and higher things in life.
(iii) Better communication at all levels

Definition:

Business ethics are rules of business conduct by which propriety of business

activities are judged . Business ethics relate to the ethical responsibilities and
obligations of business professionals- Managers in business unit

(VII) Role of Business Ethics:

1. Business ethics is crucial as it has considerable influence to have an

efficient smoothly operating economy . Ethics helps the market to its best

Example :

Tata: Tata evolution is not just on any kind of capitalism but on

ethically-based management

2. The government, laws cannot resolve certain in key problems of business

and protect the society .

Example :

Companies social responsibility extends beyond what the law strictly requires
.

3. Ethical activity is valuable in itself , for 1ts own sake , because it enhances
the quality of lives and the work we do. Business has an ethical responsibility
for fairness to its ALL stakeholders .

5 Prof . Swapan Das Gupta

(VIII) Th ree C 's of Business Ethics :

C- Compliance : The need for compliance of rules-

(i) Laws
(ii) Principles of morality
(iii) Customs of community
(iv) Policy of the company regarding fairness

C- Contribution : The contribution business can make to society through -

(i) The core values

(ii) Quality of one's products and services
(iii) By providing j obs to employees
(iv) Usefulness of activities to surrounding commun ity
(v) QWL- (Qua lity of Work Life) influenced by ethical and moral values

C- Consequences: The consequences of business activity-

(i) Towards env ironment inside the workplace and outside the
organization and community
(ii) Social responsibility towards Stakeholders
(iii) Good public image- sound business practices so that public image is
not tarnished

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